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Getting a call from a debt collector can feel frustrating and overwhelming. But if you receive a call from a collection agency, don’t freak out. Take a pause and plan so you can handle future calls and get your debt paid off if you need to.
It’s important to know your rights when it comes to debt collection. Let’s discuss exactly what a debt collector can and can’t do according to the law so that you can make an effective plan to handle your debt collectors.
How debt collectors get your information
When you haven’t paid a debt to a creditor (for a loan or a medical bill, for example), they may sell it to an agency or hire an agency to collect the debt on their behalf. The responsibility of collecting the debt then falls to the collection agency.
The creditor will likely pass along some of your personal information — like your address and phone number — so that the collection agency can contact you. If this information is incorrect, they may also try an internet search to find your current contact information.
If a debt collector got your information from the original creditor, they’ll have your personal details, such as where you live, the amount owed and the company you originally owed money to. If you’re dealing with legitimate debt collectors, they should have no problem sharing information related to your debt.
5 ways to deal with debt collectors
If you’re dealing with a third-party debt collector, there are five things you can do to handle the situation.
1. Be smart about how you communicate
Debt collectors will continue to contact you until a debt is paid. Ignoring a debt collector when a debt is yours can cause further damage to your credit score and report.
However, whether you know the debt is yours or if you can pay the debt or not, avoid excessive talking. Don’t confirm that the debt is yours or share anything over the phone, including if you can pay and how you plan to.
The collector must legally tell you information about the debt in question. This includes the original creditor’s name and contact information, the amount of the debt, when the last payment was made, and what you can do to dispute the debt.
If they don’t offer this information at first contact, they must provide it in writing within five days of initial contact with you.
Quick tip: Don’t volunteer any information during the initial communication from a debt collector. Keep your ears open, and keep a record of the conversation for your reference.
2. Get information on the debt
Without admitting the debt is yours, get information from the debt collectors before you make plans to deal with it. Ask who the original creditor was, the original debt amount and how much is owed. The more details the debt collector can provide, the better. Again, this information should also be provided to you in writing within five days of a collector first contacting you.
Certain consumer debt has a “shelf life” in which a creditor or debt collector can legally sue you for the debt. This is called the debt’s statute of limitations, which varies by state and type of debt.
If the statute of limitations has expired, the debt collector can no longer sue you to recoup the debt. Admitting a debt is yours may reset the clock on old debt, so never confirm, even if you know the debt is yours.
Quick tip: If the debt is yours, research its statute of limitations ASAP. Find the statute of limitations for the debt in your state by contacting your state attorney general’s office.
3. Get it in writing
Legitimate debt collectors are required to send you a letter in the mail detailing your outstanding debt, such as who the original creditor is and how to contact them, as well as how much you owe. You should also get information about how to dispute the debt, which can come in handy if the debt in question isn’t yours.
The collector should send you information about the debt within five days of communication. Send a written request for one so that it is documented. When you receive a letter back from the creditor with information about the debt, verify that it is your debt.
Quick tip: The debt notice with required details is another layer of consumer rights protection. If a debt collector doesn’t give this information by the required timeline, yet keeps contacting you for collection, you can sue them in a federal or state courtroom for violating your consumer rights.
4. Dispute a debt that isn’t yours
If you don’t think the debt is yours, send a written dispute letter within 30 days. At this point, the collector is legally required to seize communication and collections efforts until it provides you with a written verification for the debt.
Quick tip: Make sure you date your dispute letter, keep a copy for yourself, and have proof that it was sent. For example, mail it via Certified Mail, or if faxing your letter, retain the fax confirmation that shows the sent timestamp.
5. Try settling or negotiating
After you’ve received your letter and verified that the debt is yours and that it’s still within its statute of limitations, see if the debt collector will settle for a portion of the cost if you pay upfront. If they still want the full amount due, ask if you can set up a payment plan.
Quick tip: Get the settled or negotiated amount and payment terms in writing before initiating any payments or providing payment information.
Understand your rights when dealing with debt collectors
In accordance with the Fair Debt Collection Practices Act (FDCPA), The Federal Trade Commission ensures that all debt collectors follow certain debt collection laws. It’s important to know what these laws are so that you know if a debt collector is violating your rights. All debt collectors must follow these rules:
- They have rules for contacting you. Debt collectors are only allowed to call you between 8 a.m. and 9 p.m., and they’re not allowed to call you at work. You might be dealing with a debt collection scam if you get a call outside of these hours. If a debt collection agency is legitimate, it should have no problem providing you with company information, including a callback number, company name and address.
- They can’t lie or harass you. Debt collectors can’t make you pay more than you owe or threaten you with arrest, jail time, property liens or wage garnishment if you don’t pay. Wage garnishment might be legal in your state, but your debt collector will need to take you to court first. If a debt collector is posing as police and threatens to arrest you, there’s a chance that it’s a scam; in this case, you can report the threat to the Federal Trade Commission and the Consumer Financial Protection Bureau.
- Debt collectors must provide you with information about your debt. They have to tell you a few key facts about your debt, also called “validation information.” This includes things like how much you owe, who the original debt was owed to and what you can do if you don’t think this is your debt.
If you feel like any of your debt collection rights are being violated, you should report the debt collector to the Consumer Financial Protection Bureau or your state attorney general.
How to spot a debt collection scam
Having debt can mean you are open to debt collection scams. You may even encounter these types of scams if you don’t have any real debt. To make sure that a debt collector is legit, keep an eye out for the following signs:
- Watch your mailbox. A validation letter is one way to make sure that you’re dealing with a legitimate debt collector. If you’ve just gotten a phone call from an alleged debt collector, request a validation letter before attempting to pay off the debt in question.
- Verify your details. Even if the company is legit and the debt is legit, there’s a chance that it might not be yours. Request personal details about the debt, including the original creditor and the amount. While the debt might be real, it could be for someone else who shares your name, or it might be from an act of identity theft.
- Make sure you can pay the way you choose. If the person on the phone claims that you can only pay through a wire transfer or a prepaid debit card, you might be dealing with a scammer. Even though debt collection isn’t ideal, most companies will work with you to get a debt paid through terms you’re comfortable with. You should also try negotiating — many debt collectors are willing to create a plan that helps you pay.
Knowing the steps to take if you get a call from a debt collector can help you deal with it. There are rules that debt collectors must follow to collect on old debt, so it’s important to know your rights in this situation. Don’t ignore debt.